Neera K. Badhwar is Associate Professor of Philosophy at the University of Oklahoma.

Friendship and Commercial Societies

(Revised: September 2007)

Neera K. Badhwar

Forthcoming in Politics,
Philosophy, and Economics

I.Commercial Societies and Their Critics1.1Are
commercial societies unfriendly to friendship? Many critics of commercial societies,
from both the left and the right, have thought so. They claim that the
free-market system of property rights, freedom of contract, and other liberty
rights – the “negative” right of individuals to peacefully
pursue their own ends – is impersonal and dehumanizing, or even inherently
divisive and adversarial. Yet (their complaint goes) the psychology and
morality of markets and liberty rights pervade far too many relationships in a
commercial society, eroding the bonds of personal and civic friendship.

My main aim in
this paper is to analyze and evaluate this claim. In this section I will give an
overview of the critics’ complaints against various features of the
free-market system, discuss the empirical data that might be thought to support
their complaints, and show why it largely fails to do so. In Section II I will get
to the heart of the matter: the nature of the market and of friendship. I will address
the thesis that the modes of valuation proper to production are radically
opposed to the modes of valuation proper to friendship, love, sexuality, and so
on, arguing that the thesis rests on a misunderstanding of both markets and
friendship. A proper understanding of the two reveals that, as voluntary,
reciprocal relationships, market relationships and friendship share important
moral and psychological properties, and are not the natural enemies, or even
the odd bed-fellows, many critics take them to be. In Section III I will
address the related thesis that market societies – societies based on the
free-market system of property rights, freedom of contract, and other liberty
rights - tend to commodify relationships and, thereby, weaken the bonds of
personal and civic friendship. I will argue that free markets are the most
powerful force for decommidifying or, more generally (since commodification is
not the only way of objectifying people), deobjectifying people and relationships. Hence, market
societies are not only not at odds with friendship, they create a more secure
matrix for civic and personal friendship than any other developed form of
society.[1]
Indeed, market societies provide such a matrix not only for friendship but also
for many other important values, such as art, science, and philosophy.

Marx set the tone for the criticisms in
question when he declared that the relations of production in a market economy
turn the worker’s labor into a commodity, thus alienating him from
himself and his fellow-men, and creating endemic conflicts of interests. This political
economy is sustained by the bourgeois ideology of rights which, Marx declaims,
are the rights of the “circumscribed individual,” of
“egoistic man” isolated from the community.[2] In
the ideal society, presumably, people would give toeach other out of love, with no need to
stand on their rights. To paraphrase the hero of the 1970 movie, Love Story, in such a society love would
mean never having to say “Sorry, that’s mine.”

In a similar vein,
Erich Fromm argues that market societies have created a “marketing
orientation” that leads people to see themselves and others as
commodities for exchange.[3]
He is joined by contemporary critics such as Sybil Schwarzenbach, Elizabeth
Anderson, and Margaret Radin, who see similar dangers in market societies.
Thus, Schwarzenbach complains that market societies wrongly emphasize
production or poiesis over action or praxis, to which, allegedly,
belongs the creation and nurturance of relationships.[4]
Again, while Andersonacknowledges that market societies have done much to
liberate people from the tyrannies of class and status, and that many, many
things are “properly regarded as pure commodities,” she cautions
that, unless market freedoms are limited, the tentacles of commodification will
spread through civil society to strangle other forms of valuation, including
the intrinsic valuation of friendship.[5]
Similarly, Margaret Radin warns that proposals for universal commodification
– the freedom to buy and sell whatever people might want to buy and sell
– presuppose and will lead to an inferior form of flourishing.[6]
All three call for political measures to limit commodification by (further)
limiting property rights and freedom of contract for the sake of protecting or
promoting friendship or a higher form of flourishing.

Communitarians
also bemoan the alleged loss of the virtues of community, especially political
community, in the United
States, calling for a “politics of the
common good” to replace the “politics of rights” and “competing interests”.[7]
A politics of rights, they say, has created “atomistic” individuals
who have no stake in participating in the life of their political community.[8]These sentiments are anticipated by
the 20th Century southern conservative intellectual, Richard Weaver,
who deplores “the anonymity and the social indifference of urban man”
held together only by “the cash nexus,” and who writes feelingly of
“the rooted culture” of the South, in which each person
“working in his sphere went to make up a whole” with “a
common bond of feeling.”[9]

From across the
political spectrum, the critics of commercial societies present us with a
picture of a society in which people meet in the marketplace – shopping
malls, internet auctions, restaurants, banks – to buy and sell, striking
the best deals for themselves, and then going their own separate ways. At best,
these visitors to the marketplace abide by what Fromm calls the “fairness
ethic,” eschewing force and fraud in their transactions, and respecting
each others’ rights to live their lives as they see fit.[10]
But they meet and part as indifferent strangers, with no sense of a shared
destiny or shared responsibilities. Insofar as they have any interest in
politics, their interest is largely partisan and factional. On this picture,
civic friendship is conspicuous by its absence from the economic and political
life of commercial societies or, at least, in permanent danger from the “marketing
orientation” encouraged by such societies.

1.2How
far is this picture true of life in commercial societies in general and America
in particular, where the ideology of individual rights and free markets is
probably stronger than anywhere else? Judging from some well-known facts of
American life and the spate of articles and books on the sorry state of
American society, the picture seems depressingly accurate. Libertarians, left-liberal,
communitarian, and conservative critics may all point with dismay at the
phenomenon of business interests lobbying local, state, and federal governments
for special favors in the form of subsidies or protections, or outright appropriation
of others’ property, even as they cloak their demands in the rhetoric of protecting
free markets and the right to economic opportunity. Communitarians and others
may give as an example of a politics of competing interests the litigiousness
of American society, with legions of trial lawyers enriching themselves by
nobly defending the “right” of their helpless and hapless clients
to be protected from the evil blandishments of fattening foods.[11]
Some liberals, such as Anderson and Radin (and, no doubt, many conservatives
and communitarians) deplore the relatively new phenomenon of contract pregnancy
or surrogate motherhood for improperly commodifying female reproductive labor
or children.[12]
If contract pregnancy were to be widely accepted, Anderson argues, it “would
change the way people (parents and brokers) value children generally –
from being worthy of love by their parents and respect by others, to being
sometimes the alienated objects of commercial profit-making” (172). Radin
also argues that widespread commodification of surrogate motherhood might have
a rhetorical “domino effect” that leads people to think of
women’s attributes, especially their reproductive capacities, and of children,
as commodities (1928-1935). Similarly, commodified sex (prostitution) debases a
gift value (Anderson, 154), not only for those who buy and sell sex, but also
for others, because it both stems from and encourages a debased attitude
towards women’s sexuality in the personal sphere (154). “The same
masculine sexual desire,” states Anderson,
“is gratified in personal and commodified sexual relations” (155).

Again, Schwarzenbach presents the
“disintegration of traditional (Bourgeois) familial relations, and
staggering rates of systemic homelessness, drug dependency, illiteracy, and so
forth” (99) as evidence of a breakdown of civic and personal friendship. She
claims that the emphasis on liberty rights and production is partly responsible
for the damage to friendship, and that the damage can be undone only by moving
away from liberty rights and production (115-116). More generally, critics can point
at the impressive empirical evidence marshaled by Robert Putnam in support of
his thesis that social capital has declined since the 1950s.[13]
For although Putnam attributes the decline to the privatizing effects of T.V.,
the two-career family, and other factors, rather than to market norms, one
could argue that these factors themselves are ultimately due to the prevalence
of market norms.

The gloomy critics, then, seem to be right in complaining
that civic and personal friendship in America are in the doldrums, while
(and because) markets intrude where they have no business to be, and liberty rights
flourish. It would be hasty, however, to accept this dismal conclusion about
American society on the basis of the evidence adduced above, much less to
generalize it to all commercial societies. For this picture of the loveless
society is misleadingly incomplete. Moreover, many of the problems it
identifies illustrate not the workings of free markets or the ethics of liberty
rights but, rather, of their violation or disregard.

The fairness ethics of rights and markets assumes
that individuals are free and responsible beings capable of interacting with
each other in the marketplace and elsewhere as equals.[14]
Nothing in this ethics supports the politics of favoritism and corporate
welfare engaged in by business lobbies and politicians eager for votes. Indeed,
to use the coercive power of the state to take from Paul (the taxpayer) and
give to Peter (the private business) what Peter cannot get voluntarily from
Paul (the customer) is to engage in the mirror opposite of a market
transaction. And while the free-market system leaves people free to sue fast-food
joints for seducing them with their greasy burgers, its ethics of fairness and
individual responsibility does not
support their claim to have been innocent victims.

Again, even if it is true that the practices
and attitudes of the surrogacy industry are
inconsistent with the surrogate’s autonomy and with the respect and
consideration due to her (Anderson, 170-82), it does not follow that the
practices and attitudes of the parties to
the contract are always inconsistent with the surrogate’s autonomy
and the respect or consideration due to her. Many women who become surrogates
do so autonomously, and many couples for whom they are carrying the child
develop emotional ties to the surrogates and treat them with respect and
consideration. Nor is the baby a mere commodity for the mother or anyone else.
Anderson and Radin, however, object even to partial commodification of the baby
(Anderson, 170-75, Radin, 1928-1935). But why should partial commodification be
objectionable if the child is treated well both during pregnancy and after
birth? Marriage also, after all, is partially commodified, not to mention the
professions, art, and almost anything with a legal status. Perhaps Anderson’s
fundamental objection is that the surrogate gives up the child for her own
sake, not the child’s, and that this is inconsistent with parental love
(171). But it is hard to see how the surrogate can be said to be acting only for
her own sake, not the child’s, given that she is giving up the child to
the loving care of its parents.

Let us, however, grant Anderson and Radin their
claim that surrogacy involves a debasement in attitudes towards motherhood,
pregnancy, and children. Is this a good reason to believe, as they also claim,
that if surrogacy is not banned and becomes widespread, it will have a domino
effect and lead to such a debasement even among those not involved in surrogacy
arrangements? Not really. Such a sweeping statement about the effects of a
certain practice and policy on others needs a strong empirical basis in
psychology and sociology, a basis that neither author supplies. The same
applies to Anderson’s
claim about prostitution leading to a general debasement of sexuality, and to Schwarzenbach’s
claim about the emphasis on liberty rights and economic production leading to
the breakdown of friendship. As we shall see, Anderson and Schwarzenbach also argue,
respectively, that the modes of valuation proper to pure economic goods or
production are radically opposed to the modes of valuation proper to friendship,
love, sexuality, and so on. But even if they are right about this radical
opposition in the modes of valuation proper to each sphere (and I will argue in
Section II that they are not), it does not follow that if we don’t limit
market freedoms, market valuations will spread through all spheres of life and
strangle other forms of valuation (if we legalize pot, will we cease to value
anything but pot?). Whether or not this will happen is an empirical question,
and in Section III I give reasons to think that the tendency of market
societies has always been to encourage other forms of valuation, not to
strangle them.

Finally, while Putnam’s work
undoubtedly points to features of American society that almost anyone would
regard as problematic, his overall picture of American society has also been
criticized by many as being misleading.[15]
Moreover, Putnam’s central thesis, that there has been a decline in
social capital since the 1950s, is vitiated by the fact that, as Steven Durlauf
points out, his conception of social capital is multiply ambiguous (2-3). Sometimes
Putnam uses “social capital” to mean “connections among
individuals - social networks and the norms of reciprocity and trustworthiness
that arise from them,”[16]
sometimes to mean a sense of “fraternity” (351), and sometimes to
mean networks understood simply as channels for the flow of information
(319-22).[17]
Thus, Putnam counts political activities like voting and working for political
parties, or membership in labor unions, as social capital. But voting and
membership in labor unions need not create a sense of fraternity, and the sense
of fraternity among those who work for the same political party is
counterbalanced by the adversarial feelings towards people working for
opposition political parties.

In sum, although in some ways American
society (like other societies) is a
society of mutually indifferent or even antagonistic individuals, the negative
picture often painted of it is a highly selective and, thereby, distorted one. For
a balanced view, we also need to look at the positive picture.

1.3No
one who has recently ventured from his study into the terrestrial or cyber
agora or other public spaces of America, or cast an eye on the patterns of
personal relationships, can fail to be struck by the variety of flourishing
communities: book clubs, neighborhood associations, support groups for victims
of crime or disease, non-profits that seek to protect various freedoms from the
coercive actions of the state here and abroad, and organizations that make it
their mission to teach self-sufficiency and relieve hunger in remote regions of
the world. There are also astoundingly high levels of private charity, levels
that have risen steadily from $7.70 billion in 1955 to an incredible $260.28
billion in 2005, with 76.5% of it coming from individuals.[18]
An unbiased observer also cannot fail to see signs of a national sense of
belonging to a single political-cultural community: the hundreds of think tanks
dedicated to analyzing and solving the problems of “our” society,
the innumerable print, radio, and T.V. magazines doing the same, and the many
organizations teaching the fundamental constitutional principles of this country.
Even the multimillion-dollar support by charitable foundations for
Putnam’s research into the breakdown of community was, at least in part,
an expression of concern for the American community. These observations are
borne out by extensive research that leads Robert Wuthnow to conclude that
although communities have become looser and more fluid, they are no less
extensive than before.[19] In short, Alexis de
Tocqueville’s observation in Democracy in America that Americans
are a society of joiners still holds true.[20]Many of the communities
of yesteryear have disappeared, but they have been replaced by a variety of new
ones.

1.4Nevertheless,
these criticisms of commercial societies cannot be met simply by correcting the
one-sided picture critics sometimes give of American society or pointing out their
mistaken causal analyses of the ills of American society. For it may still be
the case that there is something about the psychology of market relations that
is antagonistic to the bonds of community, family, and friendship. This might
explain why the lament over the breakdown of these bonds has been sounded
repeatedly since the very dawn of commercial society in 18th C. England and Scotland.
No less a figure than Adam Ferguson, who at first criticizes pre-commercial society for its pervasive
competitiveness in all relationships, later warns against the passing of
tight-knit communities and the coming of a society in which community members
may “have no common affairs to transact but those of trade.”[21]
Similar warnings are repeated by Marx and Ferdinand Tönnies[22]
a century later, by Weaver in the mid-twentieth century, by Fromm in the 1940s
and 50s, and by Anderson, Schwarzenbach, and Radin in contemporary times. Some
of these critics apotheosize pre-commercial societies or herald the brave new world
of the post-capitalist future, others simply want to make market societies safe
for “the higher things” in life. But all agree that the orientation
or mode of valuation proper to market transactions is hostile to the mode of
valuation proper to personal and civic friendship, so that wherever you have the
first, you have a weakening, or even demise, of the second. An adequate
response to these critics requires analyzing this thesis of the psychology of
market relations. Anderson
offers the most developed argument for this thesis, so I will start with a
description of her argument.

II. Market
Norms and the Norms of Friendship2.1The
modes of valuation proper to market production and market relations, Anderson
argues, are radically opposed to the modes of valuation proper to friendship,
love, sexuality, and so on. We value pure commodities and market relations only
insofar as they are useful as means
to our independently defined ends, whereas we value the latter as ends in
themselves (144-45). But use “is a lower, impersonal, and exclusive mode
of valuation” that sees things as fungible and capable of being
“traded with equanimity for any other commodity at some price”
(144). This stands in contrast to respect, appreciation, or love, which are
modes of valuation for entities and relationships that are seen as having
intrinsic, irreplaceable value. Similarly, Schwarzenbach argues that
instrumental productive activity (poiesis)
is a lower form of activity than the non-instrumental activity (praxis) of love and care (epimeleia). It is, again, because of the
instrumentality and fungibility (“market-alienability”) of
commodities that Radin fears that permitting universal commodification, with
its market rhetoric and market methodology, would lead us to think even of
personal relationships and attributes of personhood as commodities. All three
writers conclude that we should limit economic liberties through prohibition or
regulation of certain markets as a way of expressing the intrinsic value we
place on persons and personal or civic relationships and preventing market
norms from spreading.[23]

Since goods and
relations can be commodified to different degrees, it is useful to start with
what Anderson
calls pure economic goods and relations. A pure economic good, says Anderson, is a good whose
“production, distribution, and enjoyment are properly governed” by
market norms and whose value “can be fully realized through use”
(143). A pure economic good is a pure commodity, properly valued as a mere
means to “independently defined ends” (144). The market norms that
“exclusively” govern its production, distribution, and enjoyment
have “five features that express the attitudes surrounding use and embody
the economic ideal of freedom: they are impersonal, egoistic, exclusive,
want-regarding, and oriented to ‘exit’ rather than
‘voice’” (145-6). Schwarzenbach echoes some of the same
claims. The “proper concern” of production, she says, is
“with its product (and only indirectly with human relations or needs);
[and] its incentive is usually exclusive, private ownership or benefit to the
self” (105). Thus, economic rights like the right to private property and
the right to contract promote “selfish” behavior, in contrast to
welfare rights, which promote the nurturing, “reproductive”
activities of civic friendship (115-16).

These claims about
the nature of commodities and market relations may be illustrated by the following imaginary everyday market
transaction. When I give $2 to the street vendor in exchange for a hot dog, I
am justified in seeing and valuing the transaction and my $2 simply as a means to my gustatory satisfaction. My
relationship to the vendor is impersonal,
in that we have no knowledge of, or concern for, each other’s social
status or character. The relationship also seems to be purely egoistic, insofar as both the street
vendor and I seem to be concerned only with our own independently defined
interests, with no regard for each other’s interests (except as means to our
own interests). For all these reasons, the goods exchanged (the money and the
hot dog) as well as my relationship to the vendor are entirely fungible: any vendor on the street who
made a good hot dog would have done equally well, as would any hot dog from his
cart in exchange for any two dollar bills from my wallet. Our relationship is
also exclusive, want-regarding, and oriented to exit
rather than voice. The vendor and I
have exclusive rights to the goods exchanged, which are distinct and not
shared, we both respond to each other’s wants without asking if these
wants are worthy (he doesn’t quiz me about the nutritional value of my
daily diet, and I don’t quiz him about the worth of his occupation), and
we both know that, as market actors, we can influence each other’s
behavior chiefly through trade or a refusal to trade – a simple
“take it or leave it” (exit).

In should be easy
to see the differences between my relationship to the vendor and a close
friendship. Both involve an exchange of goods, but in friendship these goods,
as Anderson puts it, are “jointly realized,” and are “not
merely used but cherished and appreciated, for they are expressions of shared
understandings, affections, and commitments” (151). Further, they can be
exchanged only as gifts, and they aim “to realize a shared good in the
relationship itself, whereas market exchange aims to realize distinct goods for
each party.” Presumably Anderson
does not mean that no good in a friendship is distinct or separately realized,
but that the goods central to friendship, such as trust, affection, sympathy,
and companionship, are shared and jointly realized. What makes something a shared
good is not only that it is enjoyed with others, but that it is enjoyed
“according to shared understandings of what it means” (144). Moreover,
even though both gift and market exchange require reciprocity, the form and
timing differ. In friendship we expect reciprocity “only in the long
term,” for “gifts are given for the friend’s sake, not merely
for the sake of obtaining some good for oneself in return” (151-52). Schwarzenbach also stresses that the
“proper goal” of reproductive praxis
“in the best case” is not “exclusive private ownership but a
shared appropriation of the human world” and “unselfish
satisfaction” (103).

The psychology of
friendships, then, seems radically different from the psychology of market
relationships. Hence, one can understand the alarm of those who think that, if market
rhetoric and market norms were to spread into all areas of life, they would replace
(as both Marx and Thomas Carlyle complained) the “human nexus” with
the “cash nexus”. Before we join in the alarm, however, we need to
ask the following questions.

2.2Is the kind of relationship with
the hot dog vendor I used above to illustrate market norms paradigmatic of
market relations, or are there many kinds of market relations? Even if the
vendor relationship is paradigmatic of market relations, is it a purely
commodified relationship – that is, governed only by the market norms
just described - or is it also essentially governed by certain norms it shares with
non-commodified relationships, including certain forms of friendship? To be
sure, if a market relationship concerning the production or exchange of a pure
commodity is defined as a purely
commodified relationship, then the answer must be that the vendor relationship
is purely commodified and that it shares no norms with friendship. But this
answer, as I argue below, cannot be right; for although there are pure commodities and purely commodified
relationships (such as the slave-master’s to the slave or the
hostage-taker’s to the hostage), there can be no purely commodified market relationships.[24] Again,
even if economic activities concerning the production or exchange of pure
commodities can be properly valued entirely instrumentally, can they not also
be properly valued also as ends? And finally, even if the value of some
economic activities is entirely instrumental, are they necessarily inferior to
“friendship activities,” or is this an unwarranted conclusion? If
these criticisms of commercial activities and relations are mistaken, then the claim
that the norms governing them are at odds with the norms governing intrinsic
goods like parental love, sexuality, or, more generally, love and friendship,
is ill-conceived, as is the proposal to (further) limit property rights and
freedom of contract for the sake of preventing a general devaluation of
intrinsic values.[25]

I will argue that market relations come in
many stripes, but none is entirely commodified because none is entirely instrumental.
Moreover, like all relations and activities that exercise important human
capacities and play an important role in a meaningful life, market relations
and activities are essentially structured and supported by ethical norms and,
in turn, support these norms. If the ethically bleak picture of market
relations given by its critics seems right at first sight, it is because it
largely fits many simple, everyday transactions such as buying hot dogs from
unknown street vendors. But the minimalistic picture does not completely
describe even such transactions (Section III below) which, in
any case, are not paradigmatic of market relations. Furthermore, as the
following examples show, to the extent that this picture is true of the vendor
relationship, it is also true of many non-market relationships. So the sharp dichotomy
between market and non-market relationships is called into question from both
sides: market relationships are not entirely instrumental, and non-market
relationships are often largely instrumental.

2.3Consider the relationship of two
previously unacquainted club members playing a game of squash. The value of the
relationship to them is primarily instrumental. They are playing each other
only for the sake of a good, invigorating game, and any other club member who
played equally well would have served their purposes just as well, regardless
of his character or social status. Consider, again, the relationship of an
audience to unknown actors in a play. The play itself may have aesthetic,
psychological, and moral value, but the actors’ value to the audience is primarily
instrumental, lying in how well they play their parts. The audience is there
exclusively for its own enjoyment or enlightenment, and any other cast of
actors that could play the parts as well would have been just as welcome,
regardless of their individual identities. Hence, these non-market
relationships are no different from my market relationship to the unknown hot
dog vendor: both are equally instrumental, impersonal, egoistic, fungible,
want-regarding, and oriented to exit rather than voice.

It might be thought that since the alleged non-market
relationships are themselves based on market transactions - a fee for club
membership, a ticket for the play – my comparison does not really make my
point. The underlying market transactions, however, do not affect my argument,
because the instrumentality, impersonality, fungibility etc. would obtain, for
the reasons given above, even if the club membership or play were free. This
suggests that the crucial factor in making the vendor-buyer relationship largely
instrumental etc. is not that it is a market relationship, but that it is a transient exchange relationship between strangers.
Hence, other things being equal, we should expect instrumentality,
impersonality, etc. to vary with the length and depth of an exchange
relationship. To see this, let us imagine that the two squash players, having
enjoyed the first unplanned game, decide to play together regularly. Even if
their interaction is limited to squash interspersed with occasional
pleasantries, even if their knowledge of each other’s character and
personality is strictly limited to their comportment on the squash court, if
they like each other and miss seeing each other when one of them cannot make
it, their relationship has turned into a friendship – the sort that
Aristotle calls a “pleasure friendship”.[26]
And so, even though the relationship is still primarily an instrumental,
exchange relationship, in the sense that it would not endure if one of them
lost interest in squash or became unable to play, it is less instrumental and
fungible than before, because another equally good player would not do just as
well.

The same process occurs in market
relationships, such as between street vendors, or workers in grocery stores and
their regular clients. As the interactions extend over time and the faces
become familiar, a mutual and active liking, pleasure, and goodwill replace the
abstract goodwill that most of us bear towards strangers. The market relationships
have now become, to borrow Aristotle’s term, “utility
friendships” – friendships based on utility.[27]
Indeed, sometimes the friendship aspect of the relationship can even be dominant,
as when the market exchange simply serves as an occasion for a friendly visit.[28]
If another street vendor or store owner were to take the place of this one,
there would be a sense of loss, even if, in time, the sense of loss
disappeared.

More sustained market relations give rise to
more sustained utility friendships that the Romans called necessitudo – friendships based on the necessity of the
situation. As Adam Smith puts it:

Among well-disposed people, the necessity or
conveniency of mutual

accommodation, very frequently produces a friendship not unlike that which takes

place among those who are born to live in
the same family. Colleagues in office,

partners in trade, call one another
brothers; and frequently feel towards one

Business partners often develop a friendship
on the basis of their shared interests and cooperation at work, as do
representatives of businesses that rely on each other’s products and work
closely together. Their mutual liking, goodwill, and pleasure in each
other’s company create loyalties that may even sometimes get in the way
of their business interests.[30]
Hence, even though (by hypothesis) their friendship would not last if their
interests changed, their sense of loss would be greater than that of the utility
friends described above. This makes their friendship even less instrumental,
fungible, and so on.

But it is not only qua friendships that
these long-term business relationships differ from transient exchange relationships
in their degree of instrumentality, fungibility, etc. They differ even qua
business relationships. All cooperative market relationships are based on
shared interests, but business partners and interdependent businesses also
shape each other’s interests to a significant extent. Their market
exchanges aim to realize not only distinct, exclusive goods for each party, but
also the shared good of the joint or interdependent business enterprise. In
such businesses, the parties involved also care about each other’s
character, since their business dealings require mutual trust and
trustworthiness. Indeed, some businesses go to great lengths to get to know
their clients’ trustworthiness. For example, Lloyd’s of London
required their big business clients to visit them for several days each year,
even if this required sailing across the Atlantic.
And trust based on personal knowledge and a complex private system of social
and business sanctions plays a crucial role in the diamond trade among Jewish
merchants in New York,
who close deals worth millions of dollars with nothing more than a verbal
promise or a handshake.[31] Contrary
to Anderson, then,
even though these business relationships concern trade in pure commodities,
they are neither impersonal nor egoistic, and the parties do not regard each
other or their relationships as easily replaceable.

These examples show three things we need to
do to understand the nature of market relations. First, we need to consider different
kinds of market relations, not only transient vendor-seller type relations.
Second, we need to consider them in the context of non-market relations of
various kinds, such as the audience-actor relation, and not only in the context
of friendships. And third, we need to consider them in the context of different
kinds of friendships, not only in the context of intimate, committed friendships
based on the friends’ character and personality. When we modulate our
inquiry in this fashion, we can see that the features of instrumentality, fungibility,
impersonality and so on are neither peculiar to market relations, nor an
all-or-nothing affair; rather, they are present in varying degrees in both
market and non-market relationships, including friendship. We can also see that
the psychology of market relations not only does not necessarily militate
against friendship, it often gives rise to friendship, because awareness of
mutual advantage naturally creates amicable feelings.

This returns me to a point I have discussed
only briefly. I pointed out above that, like a committed friendship, a
long-term business relationship is also a shared good, made up of mutual trust,
understanding, and commitment from the parties to the relationship. But in
fact, to some extent all exchange relations of mutual advantage, even transient
ones, are shared goods, even though the goods they exchange are exclusive and
distinct. Sellers and buyers in a market shape each other’s interests,
and share an interest in the continuation of a relationship of mutual
advantage.[32] Indeed,
as a network of nonexclusive mutually advantageous relations held together by a
mutual awareness of these advantages and a shared understanding of its
principles, the market itself is a shared
good.

We may conclude, then, that any view that
makes a sharp dichotomy between market norms and the norms of friendship rests
on too blunt an understanding of both markets and friendships. This is not to
say that there are no important differences between them. The most important
difference is that, whatever the personal value of a business relationship
– the enjoyment, the mutual learning, the psychological support –
insofar as it is a business relationship, it is primarily a means to the
success of the business. Hence, for example, partners who continued their
partnership even after it became harmful to their business, or companies that
continued trading even if they gained nothing from the trade, would, in
economic terms, be simply irrational (even if their actions were rational
all-things-considered by virtue of other overriding reasons). Good business
relationships qua business relationships must be primarily instrumental. By
contrast, the best friendships must be primarily ends in themselves.
Schwarzenbach takes this to imply that friendships belong to a higher moral
plane than business relationships or, indeed, than any commercial activity.

2.4Schwarzenbach appeals to
Aristotle to distinguish between praxis
as action that has its end within itself and necessarily conveys character, and
poiesis as action that has its end
outside itself and does not convey character (102). Friendship activities are
forms of praxis motivated by
“shared” concerns and “unselfish satisfaction,” whereas
economic activities are forms of poiesis
motivated “usually” by exclusive, private, selfish concerns (103). She
concludes from these premises that economic productive activities are morally
inferior to the “reproductive” activities of friendship.

I have already argued that many of the
alleged differences between productive activity and friendship are either
nonexistent or highly exaggerated. But even if we grant all of
Schwarzenbach’s premises, her conclusion does not follow, as shown by the
following analogy. Many scientific activities are exclusive and primarily means
to the end of some human need or desire, and all scientific and artistic
activities are concerned only indirectly with human relationships. But it is clearly
false to think that scientific and artistic activities are inferior to
relationship activities. Moreover, unless we can defend the dubious Aristotelian
assumption that only the good can love each other as ends, the mere fact that a
relationship is an end in itself does not guarantee its moral worth, for it
might be based on a shared commitment to some evil vision.[33]
Hence we must also reject the undefended (though distressingly widespread)
assumption made by Schwarzenbach et al, namely, that shared activities are inherently
better than unshared activities: the former may be evil and the latter deeply
worthwhile.

Schwarzenbach seems to think that all
rational (chosen) activities that “go toward reproducing a particular set
of relationships between persons over time,” such as cooking for
one’s family, playing with one’s children, and the other activities
that “women have traditionally performed in the home,” are instances
of “reproductive praxis” (102, 103). But this definition of reproductive praxis turns even productive activities
into praxis. For surely a woman might
cook only for the sake of feeding her children and not at all for its own sake,
or take a job only for the sake of supporting her children and herself and not
at all because she likes it. Recognizing this, Schwarzenbach then states that
many of these activities “can
be performed as ends in themselves” (103, italics mine). But this
implicitly acknowledges that some rational (chosen) activities that “go
toward reproducing a particular set of relationships between persons over time”
need not be performed as ends.

In any case, some things are much better
done as means, even mere means, than as ends. A mother who potty-trained her
children as an end in itself would be doing her children no favor, and one who
punished them as an end would be sadistic. The insistence that doing something
as an end is always better than doing it as a means amounts to
“end-fetishism”. Indeed, contra Schwarzenbach’s (and
Anderson’s) claims, even when something is properly regarded as an end,
it is not always morally higher or more important than the means to it.
Consider my relationship to the hot dog vendor: I enter into the relationship only
as a means to the end of my gustatory satisfaction. But in certain respects the
relationship – how I treat and am treated by the vendor – is more
important than my enjoyment of the hot dog. The reason is obvious: people are
more important ends than anyone’s gustatory satisfaction. The deeper
point, generalizable to all morally legitimate human relationships, is that
even relationships that come into being for purely instrumental reasons have a
non-instrumental dimension, because people are not mere instruments to each
other’s ends but ends in themselves. A relationship that fails to
recognize this is a relationship of predator and victim, or mutual predators
and victims, not a relationship of voluntary trade.

None of this is to deny that when the means
to an end is not a human being or a human relationship, and the end in question
is morally permissible, the end is unqualifiedly more important than the means,
since the value of the means derives from the value of the end. Hence, if
economic production were only a means to the ends of survival, comfort,
pleasure, personal relationships etc., then it could fairly be said to be lower
on the scale of value than these ends. But there is no reason to think that
production is only a means to these ends (although its role as a means is
hardly negligible in the absence of a regular delivery of manna from heaven).
To relegate it to a lower realm of human existence, as Schwarzenbach and other
critics do, is to show a serious misunderstanding of its role in a good human
life. People engage in economic production for many of the same sorts of
reasons that they engage in intellectual or artistic production – proving
theorems, writing treatises, making music - or, indeed, building friendships:
for the sake of exercising their creative or productive powers in worthwhile
enterprises. Although Fromm fails to appreciate this about economic production,
he appreciates better than even some defenders of free markets the meaning and
importance of productiveness as such. “Productiveness,” he states, “is
man’s ability to use his powers and to realize the potentialities
inherent in him” (1949: 84), and again, “[p]roductiveness means
that he experiences himself as the embodiment of his powers and as the `actor’;
that he feels himself one with his powers and at the same time that they are
not masked and alienated from him” (86).

When productiveness is understood as a
positive expression of human potentiality and not simply as a means to the ends
of survival, comfort, or wealth, we can appreciate the entrepreneurial and
creative spirit that animates all worthwhile activities, including market activities.
And then we can understand why, for instance, a philosophy Ph.D. would find
satisfaction in the enterprise of producing skateboards “adorned with
uplifting art.”[34]
Worthwhile activity in any sphere exercises our imaginative, emotional, and
intellectual powers to create things of worth and, thereby, engages and
re-shapes our identity. This is at least one reason why the failure of a
business enterprise can be as devastating as the failure of a long-term
scientific enterprise - or of a long-term friendship. Seeing commercial
activities as “poiesis”
and friendship as “praxis”
distorts the nature of both business enterprises and friendships.

The fact that
economic activities and relationships play an important role in a meaningful
life implies that the market can no more be adequately described in morally
neutral terms than can friendship: moral norms inform all worthwhile human
activities. Economic activity, as Ludwig von Mises argues, must be understood in
the context of a general theory of human action.[35]
In the next section I will argue that the fairness ethics that structures the
market has been and is a powerful force for promoting end values, and that the so-called
faults of the free market are simply the faults of free human beings in every
sphere of action.

3.1As we have seen, Fromm
acknowledges that the market could not exist without the ethics of fairness,
with its prohibition of force and fraud and the principle of equal exchange in
goods and feelings. But he thinks that the fairness ethics has nothing to say
to those with nothing to trade, for it neither endorses nor prohibits love of
neighbor or charity. The ethics needed by friendship and community, he holds,
is the ethics of Judaism and Christianity, which requires that you "love
your neighbor, that is...feel responsible for and one with him.…"[36]

The fact that the fairness ethics is not a
complete ethics is, however, neither here nor there. The ethics of universal
love is not a complete ethics either. And attempts to make it so by reducing
all ethical concepts to love are either implausible or not genuine reductions,
since they simply reproduce the putatively rejected distinctions within the
general category of love. Furthermore, the fairness ethics is far from
negligible, as Fromm’s dismissive tone suggests. On the contrary, it is
of the first importance in all voluntary, reciprocal relationships, including
personal and civic friendship. For all such relationships involve the exchange
of something deemed by the parties to be worth exchanging, whether this be a
material good, a valuable idea, an entertaining conversation, or a lovable
self. And a fair exchange of goods or feelings requires a sense of fairness,
honesty, trustworthiness, and the ability for trust. Even in a transient
relationship, such as the vendor-buyer or squash-partner relationship, although
neither party cares about the other’s overall
character, both parties care about each other’s reliability as tradersor
partners and their behavior. Moreover,
such ongoing fair exchanges not only presuppose trust and trustworthiness, they
generate further trust and trustworthiness, thereby providing the necessary
matrix for the flourishing of civic friendship (3.4).

3.2This
is not to say that all is well in the marketplace. Much that is deemed worth
trading in the market may express morally repugnant values or be detrimental to
the well-being of consumers on any plausible conception of human well-being. The
proliferation of multi-colored snake-oils masquerading as nutritional
supplements or instant cures is only one obvious example. But snake-oils are
hardly inventions of the free market- system, and are at least usually less
dangerous and more pleasant than the exorcism or potions of our ancestors. The
surrogacy industry’s frequent lack of respect and consideration for the
surrogate mother and her reproductive labor is another example of a morally
repugnant attitude (Section 1.2). Even this, however, is not a product of the
free-market system. In many precommercial societies, not only the value of
women’s reproductive labor, but their very value as human beings, has
been, and continues to be, measured by their ability to produce healthy sons,
with rejection or ill-treatment by the husband and his family as the frequent price
for failing in this function. My general point here is that morally repugnant
values or actions are not limited to commercial societies or the realm of
commerce: they exist in the press, the podium, the pulpit, and politics, as
well as friendships and communities. As the feminist writer, Adrienne Rich,
observes, “We assume that politicians are without honor. We read their
statements trying to crack the code.”[37]
For although “Men have been expected to tell the truth about facts, not
about feelings…. even about facts they have continually lied.”

We are familiar with the way businesses
sometimes exploit customers’ or competitors’ trust or
short-sightedness with misleadingly worded contracts or ads, or bait and switch
techniques. We are also familiar with fly-by-night schemes and counterfeit
coin. But each of these has its counterpart not only, say, in politics and
religion, but also in friendship. A friendship can be fraught with misleading
subtexts or outright deceptions. Rich describes a woman who lies in her
personal relationships: “A subject is raised which the liar wishes buried.
She has to go downstairs, her parking meter will have run out. Or, there is a
telephone call she ought to have made an hour ago” (475). Again,
“She is asked, point-blank, a question which may lead into painful talk:
`How do you feel about what is happening between us?’ Instead of trying
to describe her feelings in their ambiguity and confusion, she asks, `How do you feel?’ …. Then the liar
learns more than she tells” and gains power over her friend. Again, like
a counterfeiter or fly-by-night businessman, one person may pretend to befriend
another for who he is when what he really desires is some monetary or
professional advantage. Such a person, says Aristotle, is worse than
“debasers of the currency,” because in debasing the currency of
friendship, he “debases something more precious” (NE, 1165b 6-13).

It might be thought that even though human beings
wrong each other in all realms of life, there is still a difference between
friendship and commerce, namely, that manipulation or exploitation of
customers’ ignorance, fear, or short-sightedness that stops short of
outright fraud is regarded as fair play in commerce but not in friendship.[38] To
properly consider this objection, one must first distinguish between, say, misleading
ads, on the one hand, and ads that make no attempt to hide the fact that they
are “dressing up” their products to make them more attractive
rather than to mislead the customer (for example, despite the picture
advertising the latest perfume, no one can
possibly take it to claim that a woman who wears it will be mobbed by men).
Such attempts are no more dishonest or exploitative than getting dressed up for
a date (for example, no one can
seriously believe that women have naturally bright red lips or pink finger
nails). Again, it is hard to see the deception in the Shane Company’s
former ad, “Now you have a friend in the diamond business.” For on
the one hand, no one can seriously take that to mean that he has a buddy at the
company he can just call up for a casual chat (although one person apparently did),[39] and
on the other, anyone would be right to believe that he’ll find someone
friendly at the Shane Company eager to make a mutually profitable deal rather
than to gyp him.

By contrast, ads that, with the clever use of
emphasis and omission, make it sound (falsely) as though the advertised product
is both one-of-a-kind and indispensable to your well-being, without uttering a
single literal falsehood, are
examples of objectionable forms of exploitation and manipulation that stop
short of outright fraud. To quote Rich again, “Lying is done with words,
but also with silence” (474).

But is it true that such subtle deceptions and
manipulations are regarded as fair play in commerce but not in friendship, as
the critic alleges? No doubt some people hold that all bluffing that is not
outright fraud is “fair” in commerce as it is in poker, but not
everyone does.[40] Moreover,
attitudes towards deception and manipulation in personal relationships also
vary. Most people hold that subtle deceptions and manipulations in intimate non-erotic
friendships are wrong, but not everyone does. And many people believe that some
kinds of deceptions or manipulations are perfectly fair in romantic or marital friendships.
Indeed, it is in love (and war), not in commerce, that the common adage claims that
all is fair. Again, many people hold that to protect a close friend’s
interests, it is justifiable to deceive or manipulate a lesser friend, an
innocent stranger, or a business. Indeed, some people go further and justify
even outright lying or cheating in these contexts. But if deliberately inflicting
a cost on people by misleading, manipulating, or cheating them is wrong, except
under very special circumstances
(and every non-rigorist in ethics must allow some exceptions), then it
is wrong whether they are close friends, lovers, lesser friends, strangers,
businesses, or customers, regardless of what some or most people think.[41]

In both markets and friendship, however, these manipulations
and exploitations are exceptions to the rule; neither markets nor friendship
would exist if they were the rule. Misleading advertising inflicts a cost on
the business by inviting skepticism; and when misleading advertising is
conjoined with the widespread business policy of ensuring customer satisfaction
by accepting returns, it inflicts a further cost on the business. Moreover, just
as the virtues of honesty, trustworthiness, and reciprocity are partly
constitutive of friendship, they are partly constitutive of market
relationships. Hence, just as to the extent that someone “debases the
currency of friendship” he is deficient as a friend or, at the extreme,
not a friend at all, so to the extent that a practice debases the currency of
open and voluntary exchange, it is deficient as a market relationship and, at
the extreme, not a market relationship at all.

The faults that exist in a free market system are
the faults not of free markets, as such, but of free human beings in every sphere
of action; for the most part, all that changes from one sphere to another is
the form in which these faults appear. There might be vices that are peculiar
to market relationships, vices to which friendship and other forms of community
are immune. But the converse is also true: there are vices that are peculiar to
friendship and other relationships based on individual, ethnic, religious, or
national identity, vices to which markets are immune. One example is an
objectionable form of exclusivity: friends and other communities of identity can
create a closed world from within which outsiders are seen as potential enemies
or lower life-forms.[42] Markets,
by contrast, are open to everyone with something to trade; indeed, identity
considerations are contrary to market success, and hence tend to wither away in
the marketplace.

3.3I pointed out earlier that it is
a mistake to think that market norms see individuals
as mere means to business ends. I now want to argue more strongly that the
opposite is implicit in the idea of the fairness ethic and, indeed, that free
markets and liberty rights are ultimately justified by the recognition that
people are free, self-responsible agents, entitled to pursue their own ends, and
deserving of respect as ends in themselves. It is at least partly this
recognition that prevents me from even thinking of filching a bag of chips from
the vendor’s cart, and the vendor from calling me names for giving him
soiled dollar bills. This exchange of the moral good of mutual respect for each
other as ends forms the matrix for the exchange both of commodities and of
other goods in reciprocal, voluntary relationships. Just as the goods
particular to friendship, such as affection and companionship, “are not
merely used but cherished and appreciated…..[as] expressions of shared
understandings, affections, and commitments” (Anderson: 151), so the
moral good of mutual respect common to all types of reciprocal relationships is
not merely used but cherished and appreciated as an expression of shared interests,
understandings, and commitments.

Such mutual respect in market exchanges
relates us as equals, and stands in stark contrast to exchange relations based
on hierarchy or status, such as those between lord and servant. The vendor
sells his wares for the same price to visiting lords and local plebes alike,
and can tell both alike to take ’em or leave ’em. There may well be
a dignity and self-respect attached to a person’s hereditary station in
life, as some communitarians and conservatives nostalgic for the feudal past
tell us.[43] But
a dignity grounded in an individual’s hereditary station is, by
definition, not portable, and must be left behind should an individual’s
overlord oust him from his station. Nor is the dignity of those in a lowly
station equal to the dignity of those in an elevated station. By contrast, a
dignity grounded in our nature as free and self-responsible agents, all equally
free to pursue our own plans, equally free to enter or leave relationships,
goes with us wherever we go, and relates us to each other as equals. But a
general recognition of and respect for this dignity requires an economic and
political system that enables people to realize their nature as free and
self-responsible agents. Even if the beggar and the alms-giver both believe that, as a human being, the
beggar is worth no less than anyone else, it is hard for either of them to
genuinely feel this so long as the
beggar acts like a beggar, and it is
hard for the beggar to act otherwise so
long as he is a beggar.

It is not surprising, then, that it is only
with the increased opportunities created by market societies and the rule of
law that the idea of the fundamental equality of persons qua persons – an
idea praised alike by Mencius, Buddhists, Stoics, and Christians – became
firmly established.[44]
It is instructive to note that David Hume and Adam Smith celebrated the rise of
commerce not only for bringing prosperity to the many, but also for promoting
the rule of law, liberty, and good character.[45] Unlike
the later romantics of feudalism, both Hume and Smith saw dependency as
creating servility.[46] The
new commercial society broke down the old feudal hierarchies of power that had
kept the many dependent on the few, diffusing power by diffusing freedom and
wealth and promoting the rule of law. The increased economic opportunities and
security offered by the cities freed people of the need to stay in their clans
or with their feudal lords for sustenance or protection.[47]
By enabling them to strike out on their own and make their own lives, commercial
society made it possible for them to earn the pride that comes from
independence and self-reliance; by breaking the shackles of inherited status, the
market order made it possible for people to see themselves as equals and ends
in themselves.

3.4These changes were also
propitious for civic and personal friendship. In precommercial societies
friends and enemies were created by custom, station, and estate – and
most strangers were potential enemies (Silver, 1482-84). The universalism of
the new commercial society created a public space characterized by a hitherto
unknown openness and friendliness. No longer potential enemies, strangers had
enough goodwill and trust to make contracts and cooperate, as well as to
voluntarily help each other. It was through the equality and freedom produced
by commercial society, then, that the civic friendship that Aristotle thought
required a good legislator became widespread and entrenched. As Hume put it: in “the
more polished….and luxurious ages” – the ages in which people
“flock into cities” and “love to receive and communicate
knowledge,” the ages in which commerce, knowledge, and the
“mechanical” and “liberal” “arts” flourish
- “[b]oth sexes meet in an easy and sociable manner; and the tempers of
men, as well as their behaviour, refine apace. So that….it is impossible
but they must feel an encrease of humanity, from the very habit of conversing
together, and contributing to each other's pleasure and entertainment."[48]

On the personal
front, commercial society reduced the prevalence of utilitarian friendships, as
well as the sort of pretend friendship found in court society, where every
detail of “etiquette, ceremony, taste, dress, manners, and even
conversation… was an instrument in the prestige-struggle.”[49] Positively speaking,
commercial society enabled people from different walks of life to form
friendships on what Smith, like Aristotle, regarded as the firmest and highest
grounds of all: good character.[50]
The ideal of marriage based on love rather than (ironically, for those fearful
of the effects of commodification) on wealth or prestige also became widespread
only with the emergence of commercial societies.[51]
If in commercial societies diamonds are given as a sign of love by a
hopeful bridegroom-to-be, in precommercial and noncommercial societies cows or
gold are given as a price of his “love” by the hopeful
parents of the bride-to-be. Indeed, end values in general gained prominence in
human life only with the increased wealth and leisure of commercial societies:
witness the transformation of art from a largely didactic or religious value to
a largely aesthetic value, and of the wilderness from something to be tamed and
used to something to be valued for itself.[52]

IV.Conclusion

I have
argued that the critics of market societies misunderstand both markets and
friendship by conceiving of them in radically dichotomous terms.
Instrumentality, fungibility, impersonality etc. come in varying degrees and
characterize not only market, but also non-market, relationships, including
friendship. Further, although market relations are primarily instrumental, they
are not entirely so, because the individuals involved are not mere means to
ends. It is this recognition that ultimately justifies the prohibition of force
and fraud that is essential to a market relationship, and free markets are the
most potent social force for promoting this recognition. Moreover, like all
productive or creative activities, market activities play an important role in
a meaningful life and, thus, are essentially structured by moral norms. For all
these reasons, far from militating against friendship, market relations often
give rise to friendship, and market societies are friendlier to civic and
character friendship than any other developed form of society.

Acknowledgements: An earlier version of this paper appeared
in Bernard Schumacher, ed. L'amitié(Paris: Presses Universitaires de France,
2005), in the series Philosophie morale, 183-208. My thanks to Andrew J. Cohen, Adam
Morton, Stephen Ellis, Lawrence White, Richard Terdiman, and
Bernard Schumacher for their comments on earlier drafts, and to Richard
Terdiman and Monte Cook for their painstaking help with the French translation.
Thanks also to the Joint Sessions of the Mind Association and the Aristotelian
Society (July 2005) and to the Association for Private Enterprise Education
(April 2004) for the opportunity to present this paper.

[1]Many liberals have argued that political and
civil rights play an important role in supporting civic and personal friendship,
but to my knowledge no one has made a similar case for market freedoms or, more
importantly, for the thesis that market relations and friendship share
important features. On the defense of political and civil rights as supportive
of friendship, see, in particular, Jeremy Waldron,
"When Justice Replaces Affection: The Need for Rights," Harvard Journal of Law and Public Policy,
vol. II, Summer 1988, 635-47 and Allen E. Buchanan, "Assessing the
Communitarian Critique of Liberalism," Ethics,
vol. 99, no. 4 (July 1989), 852-82. In “"The Circumstances of
Justice: Liberalism, Community, and Friendship," Journal of Political Philosophy, Vol. I (June 1993), 208-34, I
argue against the communitarian charge that the primacy of negative rights and
justice in liberal societies is inversely related to a sense of community by
showing that the need for rights and justice
is present in all communities, including the community called
“friendship,” and that justice is a constitutive virtue of friendship.

[9]R. Weaver, The
Southern Tradition At Bay: A History of Postbellum Thought (New Rochelle:
Arlington House, 1968), 52-9. Weaver’s opposition to industrial or
“commodity” capitalism led him in his youth to join the American
Socialist Party. Yet Weaver was more complex - or inconsistent, as the case may
be - than my brief remarks in the text suggest: he defended the right to
private property, praised libertarian writers like Ludwig von Mises and
Friedrich Hayek, and endorsed cultural pluralism. See Joseph Stromberg,
“Weaver of Liberty,” http://www.mises.org/story/623.

[11]
And even, sometimes, from the imaginary harms done by various products. For
example, as R. Samuelson reports in “Asbestos Fraud”
(http://www.washingtonpost.com/wpdyn/ articles/A12624-2002Nov19.html), although
asbestos use has gone down precipitously, asbestos law suits have risen
dramatically, as trial lawyers take advantage of permissive tort laws to bring
class law suits on behalf of individuals who have suffered no harm, and at the
expense of businesses, their shareholders, and truly sick patients. Lawyers go
hunting for “victims” to represent with ads like: "Find out if
YOU have MILLION DOLLAR LUNGS." Needless to say, none of this is meant to
suggest that there are no justified asbestos law suits.

[14]
See, for example, M. Friedman, Capitalism
and Freedom (Chicago: Univ. of Chicago Press, 1962), and J. Buchanan and G.
Tullock, The Calculus of Consent: Logical
Foundations of Constitutional Democracy (Indianapolis: Liberty Fund, 1999),
267-69. To say that people are equal means simply that they cannot claim
special privileges for themselves; under the rule of law, all have the same
rights and obligations. But of course, they may be unequal in their needs or
talents or in what they have to offer for trade.

[17] Durlauf also discusses other problems with
Putnam’s conception of social capital, as well as with Putnam’s
causal analysis of the decline of social capital and its effects on individuals
and society.

[18]Giving USA 2006 (formerly the AAFRC
Trust for Philanthropy), the yearbook of philanthropy published by the Giving
USA Foundation, estimates that Americans gave a total of $260.28 billion for
2005, which is a growth of 6.1 percent (2.7 percent adjusted for inflation)
over 2004 (http://www.aafrc.org/press_releases/trustreleases/0606_PR.pdf;
accessed 31st July, 2007).

Putnam agrees that private charity
has grown in absolute numbers, but complains that it has shrunk greatly as a
percentage of our wealth (op. cit., 122-23). In contrast, Giving USA claims that “average charitable giving per
household in 2005 is estimated to be 2.2 percent of average household
disposable (after-tax) income, exactly at the 40-year average of 2.2
percent.”

Putnam also acknowledges the force
of the argument made by many observers that, to the extent that social capital
has been destroyed, it might be due to “crowding out” of private
initiative by “big government
and the growth of the welfare state,” but does not address the argument
in any detail. For such an argument, see D. Beito, “`This Enormous
Army’: The Mutual-Aid Tradition of American Fraternal Societies Before
the Twentieth Century,” The Voluntary City(Ann Arbor: University of Michigan
Press, 2002), 182-203. Tellingly, however, even
Putnam agrees that Americans are more generous than the citizens of any other
country, thus suggesting a link between a relatively individualistic,
free-market culture and a relatively small welfare state, on the one hand, and
generosity, on the other. For supporting research, see H. Gintis et al, “Homo
Reciprocans: A Research Initiative on the Origins, Dimensions and Policy
Implications of Reciprocal Fairness,” http://www.umass.edu/preferen/rindex.htm.

[19] R. Wuthnow, Loose Connections: Joining Together in
America’s Fragmented Communities (Harvard Univ. Press, 1998). Even Putnam
acknowledges that volunteering has gone up since 1975, that the internet has
created new communities, and that self-help support groups and grassroots
activity by evangelical conservatives has grown tremendously (180). He contends,
however, that the overall evidence points to a decline of social capital since the
1960s. But this claim holds only because he counts political activities like
voting and working for political parties, or membership in labor unions, as
social capital. But a decline in political partisan activity might be argued to
represent a growth in wisdom about the nature of the two main parties, and a
decline in union membership surely reflects, among other things, the dynamic
nature of the American workplace and the fact that American workers are now
better off than workers in almost any country.

[23] The intrinsic values they want protected range from
motherhood and sexuality (Anderson and Radin) and civic friendship
(Schwarzenbach) to labor and housing (Radin). Anderson also objects to governments treating
public health and safety and the environment as mere commodities (Ch. 9).

[24]Thanks to a referee of this journal for prompting
me to clarify this point.

[27]Aristotle,
NE,
Book VIII. There are, however, two differences between Aristotle’s conception
of utility friendships and mine. Aristotle’s utility friendships are
formed for the sake of utility, whereas
the kind I am discussing are outgrowths of
relationships based on utility but are not for
the sake of utility: people don’t need to be friends to trade with
each other. Further, unlike Aristotle, I regard utility friendships as involving
pleasure in each other’s company and not only in each other’s
utility, even though utility is a necessary condition for the friendship.

[29]The Theory of Moral Sentiments (TMS), [London: A. Millar, 1790],
VI.II.18; http://www.econlib.org/library/Smith/smMS0.html.)
On my reading of Smith, commercial society encourages a better form of necessitudo,
that between mutually dependent equals, because it spreads equality. This
differs from Allan Silver’s reading of Smith, on which commercial society
replaces necessitudo with a superior form of friendship
(“Friendship in Commercial Society: Eighteenth-Century Social Theory and
Modern Sociology,” American Journal of Sociology, Vol. 95, 6 (May
1990): 1474-1504). This is a puzzling reading, since Smith makes it clear that
colleagues and “partners in trade” form attachments because of
their frequent intercourse and proximity. My reading of this passage also
differs from that of L. Hill and P. McCarthy in “Hume, Smith and
Ferguson: Friendship in Commercial Society,” The Challenge to
Friendship in Modernity, eds. P. King and H. Devere (London: Frank Cass,
2000), 33-49, who argue that Smith reduces necessitudo to a business
strategy adopted entirely “for the sake of commerce” (38), since
“amity between people in the workplace is desirable and conducive to
business” (35).

[30] A point that cannot be accommodated by those who identify business relationships with
business friendships. See D.J. Den Uyl and D.B. Rasmussen,
“Aristotelianism, Commerce, and the Liberal Order,” Aristotle and Modern Politics, ed. A.
Tessitore (Notre Dame: University
of Notre Dame Press,
2002), who argue that a mutually recognized well-wishing, even if entirely
instrumental, is sufficient for friendship, and that even transient business
relationships involve such well-wishing (296, 301). But wishing someone well
insofar as he is useful is compatible with disliking him as a person, and
dislike is incompatible with friendship. Cf. J. M. Cooper, “Aristotle on
the Forms of Friendship,” Review of
Metaphysics 30 (June 1997), who, rightly, distinguishes business
relationships as such from business friendships by making genuine mutual liking
and goodwill within “the general context of profitability”
essential to the latter (638-9).

[31]
Barak Richman describes the mechanisms of trust created by the merchants in
“How Community Institutions Create Economic Advantage: Jewish Diamond
Merchants in New York,”
Law & Social Inquiry, Vol. 31,
No. 2, Spring 2006, 383-420.

[32]Anderson
also argues that the market is oriented to ‘exit’ rather than
‘voice’ (146). Assuming that we can make a clear distinction
between the two, I see it as a virtue of markets that we can shape them largely
by choosing what we buy and where we shop (exit) – an ongoing casting of
“votes” with our money that allows even “economic minorities,”
such as diabetics or vegans, to satisfy their preferences. Most of us
wouldn’t want to do any more market surveys (voice), much less lobby
congressmen or demonstrate on the streets (voice), to shape the market. At the
same time, in some sorts of commercial establishments, such as restaurants, we
do shape the offerings to some extent by conveying our preferences to our
servers (voice). Thanks to Larry White for this example.

[33] Even in such a friendship, however, the friends can
be, indeed, must be, fair, generous, loyal, trustworthy, etc. towards or with
each other, since without these attitudes their friendship cannot count as an
end in itself.

[41]
But calling manipulation etc. in commerce wrong even when it doesn’t
amount to fraud does not imply that it should be made illegal, any more than
calling manipulation or deception in personal relationships wrong implies that
it should be made illegal.

[44] A democracy without a free-market economy is not
enough for equality, as shown by the fact that democracies with highly
regulated economies, such as India
(especially before 1991) continue to be radically unequal and radically
hierarchical.

[50] Smith, TMS,
VI.II.21, and Wealth of Nations, ibid.
Silver goes so far as to say that Smith regards commercial society as creating
the friendship of virtue. However, Smith can hardly have been unaware that
there were always friendships of virtue. What commercial society does is
provide greater opportunities for the friendship of virtue by widening
people’s circles of friends. Hill and McCarthy (op cit.) make the
opposite mistake of completely omitting the friendship of virtue from their
discussion.

[52] See T. Cowen, In Praise of Commercial Culture
(Harvard: HarvardUniversity Press, 1998) on how markets
promote artistic diversity and make art cheaply available to the public, and T.L.
Anderson and D.R. Leal, Free Market Environmentalism, Rev. ed.(New York: Palgrave, 2001), on the change in
attitudes towards nature associated with rising wealth from 1857 to
1872 (43-6). Contrary to popular misconceptions, the first conservation efforts
were made by private individuals and commercial interests that, among other things,
established the first national parks. YellowstoneNational Park,
for example, was
established by the Northern Pacific Railroad in 1872 (Anderson and Leal, 45-6).